Holiday Pay (Harpur Trust v Brazel)
The Government has launched a consultation on calculating holiday entitlement for part-year and irregular hours workers. It proposes introducing a holiday entitlement reference period to ensure that holiday entitlement and pay is directly proportionate to time spent working. The consultation is a response to last year’s Supreme Court decision in Harpur Trust v Brazel, which held that holiday entitlement under the Working Time Regulations 1998 for permanent part-year workers should not be pro-rated so that it is proportionate to that of a full-time worker.
As a result of the Supreme Court’s decision, part-year workers are entitled to a larger annual paid holiday entitlement than part-time workers who work the same total number of hours across the year. The Government has estimated that the decision will benefit between 320,000 and 500,000 permanent term-time and zero-hours contract workers, with approximately 37% of these workers working in the education sector. In order to address this disparity, the Government has launched a consultation seeking views on introducing legislation that allows employers to pro-rate holiday entitlement for part-year workers and workers with irregular hours so that they receive leave in proportion to the total annual hours they work. It proposes to achieve this by introducing a 52-week holiday entitlement reference period for these workers, based on the proportion of time spent working over the previous 52 weeks. Importantly, weeks in which workers perform no work will be included in the holiday entitlement reference period. Holiday pay for workers with irregular hours is already calculated using a 52-week reference period, although weeks without work are excluded in calculating their average weekly pay. The consultation closes on 9 March 2023.
Consultation: https://www.gov.uk/government/consultations/calculating-holiday-entitlement-for-part-year-and-irregular-hours-workers
Despite the above consultation process and the possibility of the government essentially reversing Harpur Trust v Brazel, as things currently stand (and most likely until at least Spring/Summer 2023) the law will continue to require employers to calculate holiday pay in accordance with the Supreme Court’s decision in Harpur Trust. It’s also possible that the consultation process might result in a decision not to change anything.